Rivian stock plunges 26% from 2024 production guidance, remaining at 2023 levels
stock rivian cars (RIVN -25.60%) The stock plunged 25.6% on Thursday after the electric vehicle (EV) maker announced its fourth quarter 2023 report the afternoon before.
The decline in the stock price is largely due to the 2024 production guidance the company released, which is geared only toward the number of vehicles it produced in 2023. Rivian cited “economic and geopolitical uncertainties and pressures, particularly the impact of historically high interest rates.” The 2024 production forecast undoubtedly disappointed many investors.
The headline numbers for the fourth quarter were roughly in line with what Wall Street expected. Revenue was slightly higher than analysts’ consensus estimates, and adjusted loss per share was slightly wider.
As background, Rivian makes two pure electric vehicles for consumers: the R1T (pickup truck) and the R1S (SUV). It is also producing electric delivery vehicles, which were only available until November of last year. AmazonIt owns a significant stake in Rivian.
Below is an overview of Rivian’s fourth quarter 2023 and 2024 outlook centered on 10 key indicators.
1. Sales increased 98% compared to the previous year.
In the fourth quarter, Rivian’s revenue was $1.32 billion, beating the Wall Street consensus estimate of $1.26 billion. This result represents a 98% increase compared to the same period last year, but a 2% decrease compared to the previous quarter. Revenues were primarily generated from vehicles delivered during the quarter.
2. Production of 17,541 units, an 8% increase compared to the third quarter
In the fourth quarter, Rivian produced a total of 17,541 vehicles, an 8% increase over the previous quarter. We also delivered 13,972 vehicles in the fourth quarter, 10% fewer than in the third quarter.
Due to the peak season at the end of the year due to holidays, production decreased and delivery volume decreased.
3. Amazon continues rollout of 100,000 delivery vans
Rivian continues to fulfill Amazon’s initial order for 100,000 custom-designed electric delivery vans (EDVs). The company does not disclose production and delivery numbers for these vehicles. However, the shareholder letter noted that due to Amazon’s expected seasonality, “the percentage of total revenue attributable to Amazon was 8% in the fourth quarter of 2023, compared to 30% in the third quarter.”
And last quarter, we shared that Amazon had more than 10,000 EDVs in its fleet.
4. Operating deficit reduced by 12%
Operating loss was $1.58 billion, a 12% decrease from the operating loss in the same period last year.
5. Adjusted loss per share decreased by 21%.
Reported net loss was $1.52 billion, or $1.58 per share, a 16% improvement over the year-ago period.
Net loss, adjusted for one-time items, was $1.31 billion, or $1.36 per share, a 21% improvement from the year-ago period. The result was just short of the $1.32 per share adjusted loss Wall Street had expected.
6. Cash used in operations decreased by 23%.
In the fourth quarter, Rivian used $1.11 billion in cash for operating operations. This is a 23% improvement compared to the same period last year, but cash used in the third quarter increased by 26%.
Free cash flow was negative $1.41 billion. The size of these outflows decreased by 19% compared to the same period last year, but expanded by 32% compared to the previous quarter.
7. Cash and cash equivalents of $9.37 billion as of the end of 2023
Rivian ended the fourth quarter (and 2023) with $9.37 billion in cash, cash equivalents, and current investments and $4.43 billion in long-term debt on its balance sheet.
At the company’s current quarterly cash burn rate of $1.41 billion, its cash balance would last about 6.6 quarters, or a little over a year and a half. Relatively speaking, that is, for an early-stage pure-play EV manufacturer, Rivian’s liquidity position isn’t too bad, but it’s certainly something investors should monitor closely.
8. Reduce salaried workforce by approximately 10%
As part of a plan to increase efficiency and cut costs, Rivian announced Wednesday that it plans to lay off about 10% of its salaried workforce.
9. Production guideline of 57,000 units in 2024
Rivian expects to produce a total of 57,000 units in 2024. This is consistent with the 2023 production level of 57,232 units. For context, production in 2023 is up 135% compared to the previous year.
Management also guided for 2024 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of negative $2.7 billion. For context, in 2023 this metric was negative $3.99 billion.
10. R2 SUV will be released on March 7th
Rivian plans to unveil the mid-size SUV R2 on March 7. The vehicle is “designed to achieve a significantly lower price point and cost structure,” the company said in its shareholder letter.
2024 production forecast disappointing but not surprising
In short, Rivian filed a decent fourth quarter report but gave disappointing 2024 production guidance. However, considering the electric vehicle market, whose growth rate has been slowing over the past year due to the macro problem of high interest rates, the company’s cautious outlook is not surprising.
On the bright side, the company expects to achieve a “moderate” gross profit in the fourth quarter of 2024.
I refer back to what I wrote in point 7. “Relatively speaking, that is, for an early-stage pure-play EV manufacturer, Rivian’s liquidity position isn’t too bad, but it’s certainly something investors should monitor closely.”
